Practice Test GeeksAFC - Accredited Financial Counselor Practice Test
← All AFC Flashcard Decks

Investment and Retirement Planning Flashcards

7 cards from real AFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Investment and Retirement Planning flashcards as text

  1. A client aged 55 wants to withdraw from their 401(k) due to a job loss. Which provision allows penalty-free withdrawals in this scenario?

    Answer: Rule of 55

    The Rule of 55 allows penalty-free 401(k) withdrawals if you separate from service in or after the year you turn 55.

  2. Which of the following best describes the 'sequence of returns risk' in retirement planning?

    Answer: The risk that poor early-retirement returns permanently deplete a portfolio

    Sequence of returns risk refers to the danger that negative returns early in retirement, combined with withdrawals, can permanently impair a portfolio even if average returns are acceptable.

  3. A married couple files jointly with $180,000 MAGI. What is their ability to contribute directly to a Roth IRA in 2024?

    Answer: Partial contribution allowed (phase-out range)

    In 2024, the Roth IRA phase-out for married filing jointly begins at $230,000, so $180,000 MAGI qualifies for a full contribution.

  4. What does the term 'duration' measure in the context of a bond portfolio?

    Answer: The weighted average time to receive all cash flows, expressed in years

    Duration measures a bond's price sensitivity to interest rate changes and equals the weighted average time to receive all cash flows.

  5. A client's portfolio has a beta of 1.4. If the market declines 10%, what is the expected portfolio decline assuming CAPM holds?

    Answer: 14%

    Under CAPM, expected portfolio return change = beta × market return change, so 1.4 × -10% = -14%.

  6. Which Social Security claiming strategy involves a higher-earning spouse delaying benefits while the lower-earning spouse claims early?

    Answer: Split-claiming strategy

    A split-claiming strategy has the lower earner claim early to provide income while the higher earner delays to maximize their eventual benefit and survivor benefit.

  7. Under IRS rules, what is the maximum age by which a traditional IRA owner must begin taking Required Minimum Distributions (RMDs) as of 2023?

    Answer: 73

    The SECURE 2.0 Act raised the RMD starting age to 73 for individuals who turn 72 after December 31, 2022.